Best Car Loans and Finance Deals in the UK: Your 2025 Guide
Editor, Consumer Finance: Michelle Blackmore
Last Updated: August 12, 2025
In This Article
Finding the best way to finance a car can feel complicated, but the right information and being able to compare options can make it easier. This guide explains the key differences between car loans and car finance, how to find low-cost deals, and how to check your eligibility without affecting your credit score.
What is a car loan and how does car finance work?
A car loan is usually an unsecured personal loan that provides a lump sum to purchase a vehicle outright. You borrow the money from a lender and repay it in fixed monthly repayments with interest.
Car finance, on the other hand, can include hire purchase (HP), personal contract purchase (PCP), and other agreements such as conditional sale, where the loan is tied to the vehicle. With HP or PCP, you typically pay a deposit and make monthly payments, with options to own or return the car at the end of the term.
Both personal car loans and structured finance options are available from UK lenders and brokers that arrange deals with panels of car finance specialists.
To view personalised options, you can complete a quick, free eligibility check with multiple lenders in one go. This can help you avoid unnecessary applications and only focus on offers you are likely to be accepted for.
Get Personalised Loan Rates
Find lenders that can approve you
Options for all credit backgrounds
Representative 18.6% APR
No impact to your credit score
Mintify Limited, trading as Mintify, is an Introducer Appointed Representative of Creditec Limited who acts as a credit broker, not a lender.
Mintify Limited, trading as Mintify, is an Introducer Appointed Representative of Creditec Limited and is acting as a credit broker, not a lender. Examples are for illustration purposes only. The rate and term you are offered are subject to status and affordability and are dependent on your individual circumstances. Find out how this calculator works
Compare car loans and finance options in the UK
Below is a comparison of selected car loan and finance providers, based on our independent scoring criteria. These providers have verified customer reviews on third-party platforms such as Trustpilot. We’ve highlighted key product features including representative APRs, loan amounts, and repayment terms to help you assess suitability. Where available, you can carry out a soft eligibility check, which shows your likelihood of approval without affecting your credit score.
Loan Amount
Total Payable
Monthly Repayment
Representative APR
Representative example will update based on your input.
Loan Amount
Total Payable
Monthly Repayment
Representative APR
Representative example will update based on your input.
How to find a cheap car finance deal
Finding a low cost car loan or finance option depends on factors like:
- The interest rate or APR offered
- Whether the agreement is secured against the car
- The total cost over the term, not just the monthly payment
- Any fees for early repayment or arrangement
- Your credit profile and affordability checks
Comparing multiple lenders and finance providers is the most reliable way to identify the lowest overall cost.
What makes a car loan or finance deal ‘best’ for you?
The best deal is not just about the lowest interest rate. You should consider:
- The total amount payable over the full term
- Whether you want to own the car at the end (loan or HP)
- Flexibility for early repayment or upgrading the vehicle
- Whether a no deposit option is available
- Monthly affordability based on your budget
What’s best for you depends on your personal financial situation and the type of car you want to buy.
Mintip: Be aware of balloon payments. If you’re considering PCP, the final balloon payment can be several thousand pounds. You won’t own the car unless you make this payment, so it’s important to check whether this cost fits into your future budget.
Car loan vs car finance: pros and cons
When funding a vehicle, you generally have two options: taking out a personal car loan or entering into a car finance agreement such as hire purchase (HP) or personal contract purchase (PCP). Both have their benefits, and the right choice depends on your preferences, credit profile, and financial goals.
| Feature | Personal Car Loan | Car Finance (HP or PCP) |
|---|---|---|
| Ownership | You own the car from day one | You own it only after final payment (HP) or have the option to buy (PCP) |
| Flexibility | Can buy from any seller, including private sellers | Usually tied to specific dealerships or vehicles |
| Upfront deposit | Not always required | Could be required (usually 10% or more) |
| Monthly cost | Fixed monthly repayments based on total loan | HP: Higher monthly cost; PCP: Lower monthly cost, large balloon payment |
| Early repayment | Usually allowed, check for fees | Varies by lender; may include early settlement charges |
| End-of-term options | No restrictions, car is already yours | Return, keep (PCP), or part-exchange vehicle |
Both options can be affordable depending on your credit rating and the lender’s terms. A soft search eligibility check can help you understand which type of product you’re more likely to be accepted for.
How to check your eligibility for a car loan or finance deal
Most reputable lenders and brokers now offer soft search checks. These allow you to see your likelihood of approval before you formally apply. It is a quick process that does not impact your credit score.
- Takes less than 2 minutes
- Shows only lenders where you are likely to qualify
- Lets you compare real offers side by side
Get Personalised Loan Rates
Find lenders that can approve you
Options for all credit backgrounds
Representative 18.6% APR
No impact to your credit score
Mintify Limited, trading as Mintify, is an Introducer Appointed Representative of Creditec Limited who acts as a credit broker, not a lender.
What documents do I need to apply for a car loan or car finance?
Whether you apply for a personal car loan or structured car finance, most UK lenders will ask you to provide documents that help verify your identity, income, and affordability. Having these ready can speed up the process and reduce the chance of delays.
Common documents include:
- Proof of identity: A valid passport or UK driving licence
- Proof of address: A recent utility bill, council tax letter, or bank statement (dated within the last 3 months)
- Proof of income: Payslips, bank statements, or tax returns if self-employed
- Employment details: Employer name, job title, and length of employment
- Vehicle information: If the finance is secured, details of the car being purchased may be required
Some lenders may also run affordability checks using Open Banking data if you give consent. This helps them assess your monthly outgoings more accurately.
You will usually see what is required after completing an eligibility check and proceeding to the full application stage.
Mintip: Always check your eligibility before applying. It helps you see which lenders are more likely to approve you without damaging your credit score. This reduces the risk of rejection and protects your credit profile while you compare real offers.
How much can I borrow with a car loan?
The amount you can borrow for a car loan or car finance agreement depends on your credit history, income, monthly expenses, and the lender’s own criteria. Most UK lenders offer car loans ranging from £1,000 to £25,000, though some may go higher depending on the applicant’s profile.
Before making a decision, lenders will typically consider:
- Your income and employment status
- Your existing credit commitments
- Your credit history and score
- Affordability checks based on your outgoings
- Whether the loan is secured against the car
For car finance agreements like hire purchase or PCP, the amount you’re offered may also depend on the vehicle’s value, your deposit (if any), and the agreed repayment term.
If you’re unsure how much you could borrow, an eligibility check is a good place to start. It allows you to view potential offers based on your personal circumstances, with no impact on your credit score.
Estimate your repayments with a car loan calculator
A car loan calculator can help you estimate how much you might repay each month based on the loan amount, interest rate, and term. It’s a useful way to understand affordability before applying.
You can use a personal loan calculator to try different loan amounts and loan terms and see what fits your budget. Just remember, actual rates and terms will depend on your credit profile and the lender’s assessment.
Frequently asked questions about car loans and car finance
Can I get car finance with bad credit?
Yes, but you may face higher interest rates or stricter terms. Checking eligibility first is recommended.
Is it better to use a personal loan or dealer finance?
It depends on the rates offered. A personal loan gives you ownership from day one, while dealer finance may offer lower upfront costs.
Do I need a deposit for car finance?
Not always. Some lenders offer no deposit options, though these can lead to higher monthly payments.
How do I apply for a car loan?
Start with an eligibility check to see which lenders may approve you. Once you see your options, you can compare interest rates, loan terms, and fees. If you’re happy with an offer, you can proceed to a full application with the lender.
What credit score is needed for car finance?
There is no single score requirement. Lenders assess your entire financial situation, not just your number.
Are there fees with car loans or car finance?
Some lenders charge arrangement fees, early repayment fees, or late payment penalties. Not all do, so it’s important to check the terms before applying. The total cost of borrowing includes interest plus any additional charges, which should be clearly disclosed by the lender.
Check your car finance options
There is no one size fits all answer to which car loan or finance deal is best. The key is to compare multiple options, check your eligibility, and understand the terms and conditions so that you can find the most affordable and suitable way to finance your next vehicle.
You can complete an eligibility check with multiple lenders in one go. It takes less than 2 minutes, does not impact your credit score, and shows you which lenders are most likely to approve you.
Get Personalised Loan Rates
Find lenders that can approve you
Options for all credit backgrounds
Representative 18.6% APR
No impact to your credit score
Mintify Limited, trading as Mintify, is an Introducer Appointed Representative of Creditec Limited who acts as a credit broker, not a lender.
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The content presented here has been impartially gathered by the Mintify team and is offered on a non-advised basis for informational purposes only. We adhere to strict editorial integrity
Editor, Credit Cards: Michelle Blackmore
Last Updated: August 12, 2025
How this calculator works
This tool provides an illustrative example of the costs of a personal loan based on the loan amount and term selected by the user. It is designed to reflect, as closely as possible, the actual calculation methods used by the lender.
What we show
For each loan product:
- We calculate monthly repayments, total amount repayable, and the representative APR.
- These calculations are based on publicly available product data and are representative, not personalised.
- We display the representative example required under FCA rules, which includes loan amount, duration, total repayable, interest rate, and representative APR.
How we calculate
The calculator uses the method aligned with how the lender presents its product:
- For lenders that use flat interest rates, we calculate using simple interest across the term.
- For those that use amortised or reducing balance interest, we apply appropriate formulas to reflect declining capital balances.
- Some lenders charge interest on a daily or monthly basis; we replicate those structures where applicable.
- If there are any fees (e.g. arrangement or completion fees), we incorporate these into the total amount repayable if the lender discloses them.
- We aim to reproduce the effective cost of credit as the lender would disclose it, using their advertised or representative data.
Important disclaimer
This calculator does not provide a personalised quote or credit offer. The figures shown are for illustrative purposes only and may differ from the rate or repayment terms you are offered. The actual cost of credit will depend on your personal circumstances and creditworthiness, and will be provided by the lender during the application process.
We regularly update our product data to ensure accuracy, but cannot guarantee that all lender changes are reflected in real time.